Refer to the Graph

question 170

Multiple Choice

Refer to the graph.Each labeled point represents a different asset.For which of these assets would we not expect arbitrage to change the average expected rate of return?

• A)E only
• B)D, E, and F
• C)E, G, and H
• D)D, E, F, G, and H

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Definitions:

Fixed Expenses

Expenses that remain constant regardless of any variations in the amount of goods produced or the volume of sales, like lease payments, wages, and insurance fees.

Break-even Point

The point at which total costs equal total revenue, meaning no profit or loss is made.

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted.

Fixed Expenses

Costs that do not change with the level of output or sales in the short term, such as rent or salaries.